This graphic shows how manufacturer's rep firms operated in past versus today.
Photo credit: (Image courtesy IP Security Reps)
Has a manufacturer rep firm failed you in the past? Did you ask yourself the question, why did I hire them in the first place? Unfortunately that is not an uncommon issue.
Rep firms come in many different forms and each has a different corporate mission. Some firms seek to create a lifestyle business for the principle or partners, yet others may want to create a strong sustainable business for growing manufacturing sales. It's so important to conduct your due diligence and research the philosophy of the rep firm’s leadership prior to hiring them in order find your professional comfort level.
There are, however, some common traits among most manufacturer’s representatives. They are independent contractors who develop long-term relationships with their client companies (or "principals") to sell the vendor's products. They do not function under the immediate supervision of the manufacturers they sell for; therefore the relationship is not like that between a boss and employee, but is a business-to-business relationship.
With myriad manufacturer rep firms available to choose from, how do you find the right one for your security company? There are a few characteristics that will usually differentiate a good manufacturer’s rep firm from a bad one. Save yourself time and money by knowing up front what you need in order to build successful relationships with your customers and strategic business partners. Securing the right manufacturer rep firm can help take your company to the next level.
Here are some of the top characteristics a security manufacturer should look for when selecting a rep firm:
Documented Sales Performance – When hiring a manufacturer’s rep firm, the goal is to have them help you find the Holy Grail of clients. The due diligence process should require potential firms to provide you with any sales or business awards they have won, along with a record of documented sales success that firm has enjoyed over a measurable timeframe. Ask them to provide verifiable references from their core manufacturers on past performance. Also be sure to check their references, and do just as thorough a background checks on your potential outsourced sales staff as you would your own employees.
Commitment to Your Business Model – Each manufacturer views and approaches the security market in a unique way. Are you selling to distribution? Do you sell direct to integrators? Do you sell to the end user? Each one of these strategies have validity for different market segments, however, your rep firms’ corporate culture needs to be aligned with your company’s market approach. It is extremely awkward if a rep firm has one of its top manufacturer’s sell direct to the integrator and dealer base, while your product sells through distribution. It’s almost impossible for the rep to gain the trust and respect from distributors due to the conflict in the channel.
Strong Financial Position – A business that you plan to hire long term to represent your solution must be financially secure. This security allows the firm to hire and retain top-quality staff, invest in long-term sales cycles and address your market with long-term strategies. A best practice is to request a full financial statement and a credit check on the rep firm you are considering.
Technical Expertise – In order to succeed, a rep firm needs to be technically savvy and understand the fundamentals of physical security’s new IP-centric landscape. Without this knowledge, the rep will not have the technical skills to deal with evolving technologies and the demands of today’s clients. The fact that IT staffs are more integrally involved in selecting and implementing security solutions requires a higher level of sales acumen.
Industry Specialist/Expert – Much like scheduling a specialist for a medical procedure, it is wise to choose a rep firm with specific vertical market expertise. It’s important to work with a rep firm that is dedicated to your industry and has strong relationships with key security integrators and distributors. Not too long ago, some manufacturers were hiring data communication representatives in the security space. Unfortunately, neither party enjoyed much success unless the firm hired a professional dedicated security staff to augment its efforts.
Creating End User Demand – A successful rep firm will understand how important it is to market your product not only to distributors, but to the end users and consulting engineers. Due to drastic shifts in the marketplace, the focus should be on creating end user demand and brand loyalty for your product through consistent exposure, communication and marketing. The end user is the entity that develops long term brand loyalty, and most likely will be around longer than their integrator or sales rep. Brand loyalty is the key to any manufacturer’s success.
Strong Sales and Management Team – As the leader goes, so goes the company. A rep firm should consist of more than one individual with a solid reputation. The rep firm you choose needs to have established and documented processes to train their staff on new manufacturers and their technologies. The leader/leaders in the firm should also have strong ethical reputations in the market. Distribution and integration in the local market can provide a significant amount of information to the organization, keeping in mind that there is a difference in “liking” a firm and feeling that they are “ethical”.
Building Partnerships – A winning rep firm creates partnerships with their customers and forms strong strategic relationships within the security industry. It’s important that the firm continually delivers value to their customers and is a trusted partner of choice when it comes to security. By taking the time to understand each customer’s unique situation and then recommending the right solution, your reps provide success and goodwill for both your products and your status as a trusted provider.
Have their Own Sales Staff – A large percentage of manufacturers rep firms do not employ their sales personnel, rather they hire them as 1099 contractors. Although firms can significantly decreases risk, lowers costs and reduces taxes using 1099 contractors, there can be a downside for both the rep firm and manufacturer. With 1099 contractors not being a direct and true employee, they are not subject to the company policies and procedures or overall direction of managers and officers.
These guidelines are a basic roadmap for a solid rep-manufacturer relationship. Each manufacturer has a different set of priorities when selecting a rep firm. It’s important to keep the factors above in mind when making a final decision.
“We look for sales organizations that are extremely results-oriented and dedicated to the security industry,” says Kenichi Mori, director of marketing and product management for Sony Electronics’ Security Systems Division, who recommends using this simple formula for sale success. “It is also important to find firms that employ top-tier talent in each geography they serve.”
About The Author: Robert Lydic is president of IP Security Reps Inc., a leading security manufacturer’s rep firm based in Brighton, Mich. The company, which was founded by Lydic in 2010, has won 10 National Sales Awards over the last four years. Lydic has been in the IP data, voice and video market since 1998. He has also served on several entrepreneurial leadership panels in Ohio and been a member of the Entrepreneurs Organization Detroit Chapter since November 2003. For further information on IP Security Reps, visit www.ipsecurityreps.com.